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I want to purchase my parents home and it will become my primary residence. It is currently in pre-

  • October 02 2013 - Alameda
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Answers (11)

Profile picture for user4539511
My parents own the 1970s home I grew up in.  Currently it is a money pit for my dad as my brothers live in the home and do not pay rent, dad pays for repairs, taxes, home owners insurance, etc.  He is considering selling this house due to the financial strain.  I on the other hand, would like to purchase the house, update it, and lease it for it has good rental potential for the family for years to come.  

How would we go about getting this done?  Since we this is a family transaction, do we need a Realtor?  Additionally, I am currently in the process of building my own home and really cannot afford to have any expense of getting in the way of my new mortgage at this point.  What can we do now to get this off of him for this year and get this home prepared for leasing?
  • October 24 2014
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If you are buying it FHA it will have to be owner-occupied by you. That part of it would have to make sense. How close is it to your work? Do you currently own a home? I would need some more details.

There's a few things we would have to iron out but I see this as doable.

Craig Bosse
  • January 09 2014
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if you currently in the resident and you would like to buy there are many ways you purchase the house. 
if you like to more detail please call me 
  • October 26 2013
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Tough situation for sure.  Despite your good intentions, in all probability a lender is going to view your application as a bail out..and/or you are acting as a straw buyer.  The ticket is to get your parent's loan current.

Protecting their equity position would appear to be the best course of action.  Without knowing specifics, it would be difficult to assess the best course of action; however, they would almost certainly have the ability to access equity through a private investor.  Yes, costs are high...but losing the house to foreclosure will cost much more.

Another option might be a reverse mortgage.  Credit and income are not the determining factors on a reverse mortgage.  Age (minimum 62) and equity are the governing guidelines that would determine success.

Once the financing is stabilized and the situation regarding any question about bailout or straw buyer is addressed, your ability to purchase the property...and/or refinance down the road by putting you on the title.

There are options.  Just do everything you can to ensure your parents equity is protected first.

All my best,

Deborah
NMLS #279125
WJ Bradley

"We Listen.  We Care.  We Deliver."

  • October 04 2013
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I suggest you speak to your tax advisor to make sure that you structure the purchase, the "gift" and the "loan" if any between you and your parents in the most tax-advantaged way.  With regards to property tax, I believe that Alameda county allows for a an offspring purchasing a parent's home to maintain the the property tax rate being paid by the parent.  If needed, I am happy to refer you to a tax advisor whom I have worked with on similar transactions in the past.
  • October 03 2013
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Profile picture for PaulMcCausland
Brian is correct. Have your parents contact the foreclosing bank & tell them that the house is sold. I think there is a piece of the puzzle that you're leaving out. Please contact me to discuss in detail.
  • October 03 2013
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Profile picture for user09681658
No it is NOT underwater, they are in pre-foreclosure because they got behind on their payments.  I would like to pay the amount to reinstate their current loan however that is roughly $55,000, I don't have that much money and can't find a lender that would give that much as an unsecured loan. I was having to do an FHA loan because I don't have that kind of money laying around. I was told by one lender (UWM) that it would be a "bailout loan" and that they don't fund bailouts.
  • October 02 2013
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Profile picture for Pacita Dimacali
If it's in pre-foreclosure, is it currently listed?

And since it's underwater, are they selling it as a short sale? If so, you won't be able to buy it because it's against the principles of short sale. That is, the sale must be arms' length, and there should be no personal or business relationship between the buyer and the seller.

If they have $300K equity -- why is it in pre-foreclosure? Are they behind in the mortgage payment? IF so, how simple would it be for your parents, with your help, to make payments  on the delinquent amount to bring it current....and then you can make arrangements to buy it from them as a regular transaction between the two of you? Consider any kind of help you can provide as partial downpayment.

It would be a shame to lose a house particularly if there is that much equity it in.

  • October 02 2013
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Profile picture for Brian GFL Capital
buy it from your parents. use the equity from the home as a gift of equity and then you wont need the cash down payment as you are using the equity there for that.
  • October 02 2013
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Profile picture for user09681658

Sorry! I did get cut off.  The house is currently in pre-foreclosure however there is $300,000 of equity in the house (they owe $300K less than the appraised value).  I want to purchase it from them for $100K over what they owe (so $200K less than market value).  Is this allowed? Or would it be considered a "bailout loan"?

  • October 02 2013
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Profile picture for Arizona Mortgage Pro
I think your question was cut off, would you mind posting further details?
  • October 02 2013
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